Vietnam

Strategy

Being a global energy company, Gazprom’s development strategy provides for the creation of the entire hydrocarbon chain from production to sales in new markets, also involving facilities outside Russia.

In May 2008 the parties signed an Agreement of Further Cooperation envisaging geological exploration and development of four new blocks offshore Vietnam. Vietgazprom, a joint operating company set up on a par, was appointed as the project operator. Under the Agreement, the parties also established a Gazpromviet joint venture to perform activities in Russia, Vietnam and third countries.

Gazprom and PetroVietnam signed a Strategic Partnership Agreement in December 2009. The document provides for long-term collaboration in the following areas:

further joint work in Vietnamese offshore blocks under the previously concluded oil and gas contracts;

active cooperation in oil and gas projects in Russia, Vietnam and third countries within the Gazpromviet joint venture:

sci-tech cooperation;

establishment of a Joint Coordinating Committee and Joint Working Groups.

In April 2012 Gazprom and PetroVietnam signed an Agreement on training and retraining the staff to be employed by Vietnamese oil and gas companies.

In July 2012 Gazprom Marketing & Trading Singapore, a wholly-owned subsidiary of Gazprom, and PetroVietnam Gas Joint Stock Corporation (i.e. PVGas, integrated into PetroVietnam) signed a Memorandum of Understanding envisaging LNG supplies to the Socialist Republic of Vietnam.

In May 2013 Gazprom and PetroVietnam signed a Memorandum of Understanding to cooperate in natural gas production and use as a motor fuel in the Socialist Republic of Vietnam. In November 2013 a PVGAZPROM Natural Gas for Vehicles joint company was set up as part of the practical phase in implementing the abovementioned document. The joint company’s primary objective is to arrange the conversion of public transport in Ho Chi Minh City (biggest metropolis of South Vietnam) to natural gas.

Block Nos. 112 and 129–132

The Vietgazprom joint operating company carries out exploration activities in block No. 112 (Gulf of Tonkin) offshore Vietnam. Signed in September 2000, the contract for this project provides for hydrocarbons prospecting, exploration, production and sales.

In October 2008 Gazprom and PetroVietnam signed another oil and gas contract for blocks No. 129, 130, 131 and 132.

In addition to the Strategic Partnership Agreement, Gazprom and PetroVietnam signed an Addendum to the Oil and Gas Contract for block No. 112 in December 2009. The Addendum includes the decisions previously taken by the Vietnamese Government on extending the scope of the Contract to cover the adjacent blocks and on executing two oil and gas contracts (block No. 112 and blocks Nos. 129–132) by a single operator, which is Vietgazprom.

First success

A commercial inflow at the rate of 400,000 cubic meters of gas per day was produced in August 2007 during the first exploratory well testing in Bao Vang as part of the prospecting activities in block No. 112 performed by Vietgazprom. The well output also showed the presence of gas condensate.

Later in 2009 the neighboring area of Bao Den yielded 300,000 cubic meters of gas a day.

So far, two gas and condensate fields were discovered within block No. 112.

Current state

As of today, Vietgazprom continues geological exploration on the continental shelf of Vietnam. 2D seismic and geological surveys were performed under the contract on blocks Nos. 129–132 and the interpretation of obtained data was completed. Electrical sounding was also conducted; during the operations, the experts rated the local formations according to their prospecting importance and pointed out the structures recommended for further exploration.

Cooperation broadening

In April 2012 Gazprom and PetroVietnam signed an Agreement on Gazprom involvement in the development project for blocks 05.2 and 05.3 offshore Vietnam in the South China Sea. According to the document, Gazprom obtained a 49 per cent stake in the Production Sharing Agreements that set forth terms and conditions for the project. The Russian party in this project (as well as in the Vietgazprom joint operating company and the joint venture focused on NGV fuel) is represented by Gazprom EP International, a wholly-owned subsidiary of Gazprom, dealing with hydrocarbons prospecting, exploration and production.

Two gas and condensate fields, i.e. Moc Tinh and Hai Thach, as well as the Kim Cuong Tay oil field were discovered within these blocks. The aggregate reserves of the two gas and condensate fields are evaluated at 55.6 billion cubic meters of gas and over 25 million tons of gas condensate; the recoverable reserves amount to 36 billion cubic meters of gas and over 15 million tons of gas condensate. It is planned to construct 16 exploratory wells 2,000 to 4,600 meters deep in order to develop the fields. In October 2013 commercial production was launched there.